Zimbabwe accepts Mimosa/Impala JV plan

Companies / 14 December 2012, 3:11pm

File image: Reuters

Zimbabwe has accepted Aquarius Platinum’s indigenisation compliance plan for the Mimosa mine‚ which it jointly owns with Impala Platinum although the new shareholders will have to abide by obligations to provide funding for the company when the need arises or risk having their stakes diluted.

President Robert Mugabe and his Zanu PF party are spearheading the empowerment policy and resolved at the party’s conference last week to intensify the drive to have foreign owned companies fully comply with the policy. The law compels foreign companies to cede 51% majority shareholding for the empowerment of black Zimbabwean groups.

Platinum mining companies in Zimbabwe have been pressured to comply and honour their indigenisation plans. Zimplats this week said it had submitted a revised plan giving provision for payment of its proposals while Anglo Platinum’s Unki mine has also concluded an indigenisation deal with the government.

Aquarius Platinum chief executive officer‚ Jean Nel‚ said compliance with the empowerment law will “offer Mimosa security of tenure”. He added that Mimosa had committed to complying with the Zimbabwean law as a “true reflection of the worth of our investment in Mimosa” which he described as a valuable asset and one of the lowest cost producers in the PGM sector globally.

Under the agreement Mimosa will cede 51% ownership to indigenous Zimbabwean groups for $550 million. This has been calculated at an “agreed” market value of $1.078 billion for the Mimosa mine.

Mimosa has agreed to provide funding for this through a vendor financed loan vehicle as part of efforts to facilitate the smooth conclusion of the transaction over a period of 10 years.

“This loan will bear interest at a rate of 9% annually and will be settled through the waiver of the right to receive 90% of dividends due to the indigenous entities in favour of Mimosa. Any loan balance outstanding at the end of the ten- year period will be payable in cash‚” said Mimosa in its statement.

Mimosa appears to have broken with tradition after clearly stipulating in its plan that future funding for the mine’s operations and capitalisation‚ where necessary‚ will be provided by all shareholders‚ including the indigenous Zimbabwean groups empowered under the transaction.

“To the extent that shareholders cannot or do not comply with their funding obligations‚ Mimosa Investments may fund any shortfall which may lead to dilution‚” it said.

The company’s plan shows that 10% shareholding will be given to the Zvishavane Community Share Ownership Trust which is held by communities in the area around which Mimosa operates. Another 10% will be ceded to the Mimosa employee share ownership trust.

The company will also give up 31% of its shareholding to the National Indigenisation & Economic Empowerment Fund (“NIEEF”).

Zimbabwe Empowerment Minister‚ Saviour Kasukuwere confirmed that the government had accepted Mimosa’s indigenisation compliance plan. “I am pleased to say that Mimosa Investment’s indigenisation plan reflects the spirit and letter of Zimbabwean law and signals that we welcome Aquarius as an investor to Zimbabwe‚” he said. - I-Net Bridge